GOLD PRO WEEKLY, September 25-29, 2017

[Sive Morten]

Fundamentals

(Reuters) - Gold edged up from the previous day's four-week low on Friday as the dollar fell and
investors sought a safe haven from geopolitical uncertainty caused by rising tensions between North Korea and the United States.

Bullion is often used as a refuge in times of political or economic turbulence, while assets considered risky such as stocks are dumped.

North Korea said on Friday it might test a hydrogen bomb in the Pacific Ocean after Trump threatened to destroy the country, with leader Kim Jong Un promising to make a "mentally deranged" Trump pay dearly for his threats.

The Japanese yen and Swiss franc gained on the possibility of North Korea conducting another nuclear test. U.S. stocks and the greenback were down. Spot gold was up 0.36 percent at $1,295.71 per ounce
by 2:29 p.m. EDT (1829 GMT), having hit a four-week low of $1,287.61 on Thursday. Prices hovered near support at the 50-day moving average.

Even with the day's gains, spot gold was poised to finish the week down 1.5 percent, the largest such decline since early July.

"Gold disappointed today with just a perfunctory bounce as yields and the dollar receded from highs, but largely neglected North Korean threats of a hydrogen bomb test over the Pacific Ocean," said Tai Wong, head of base and precious metals trading at BMO Capital Markets in New York.

"With the speculative market quite long and bullion trading just above key technical support levels fresh buyers were scant."

The Fed earlier this week signalled it was still on track to raise interest rates by year-end. Tighter monetary policy raises the opportunity cost of holding non-yielding bullion. The dollar had risen to a two-month peak following the Fed's comments.

U.S. gold futures for December delivery settled up $2.70, or 0.21 percent, at $1,297.50 per ounce.
Gold may end its current weak bounce around a resistance at $1,299 per ounce and then fall towards support at $1,281, said Reuters technicals analyst Wang Tao.

"For gold it will continue to be back and forth, one day it's about Fed tightening and balance sheet reduction and the next it's about the geopolitical uncertainty that creates this tug of war," Danske Bank's Pedersen said.

COT Report

CFTC data doesn't show yet any big reversal in market sentiment. Yes, last week net long position has decreased slightly, as open interest as well, which indicates some contraction of long positions. But decrease by far is not significant and we probably should talk about retracement rather than reversal by far:

SPDR Fund statistics also shows positive dynamic of investors' demand and despite started retracement, storages are rising:

Technical
Monthly

Nothing significantly has changed yet on big picture. Price just step up a bit out from the top of September. All other things stand mostly the same.

As market has shown strong close on August, we probably could put aside our bearish scenario for awhile. If gold will start to show strong bearish action again, we will return back to it. But right now upside scenario has more chances to happen.

On July and August we have tail close. Right now market has reached solid resistance area around 1330. It already has been tested once, but it is still valid. This is not just 3/8 major monthly Fib level. This is also Yearly Pivot Resistance 1 and 0.618 AB-CD target. Right now market still stands close to it.

Next major target will stand around 50% Fib level and Agreement, as it coincides with AB=CD objective point as well. Market could take the shape of butterfly to get there. 1.27 extension also stands in the same area:

Weekly

So, Here we have two AB-CD patterns of different scale. First one is large monthly AB-CD that we've mentioned above and this is 0.618 target that has been hit at 1326$. Last week we talk on a bit late reaction on 1330 resistance area. It should happen earlier but market has shown some overreaction due geopolitical external driving factors. Now it seems that some reaction has started, well later is better than never. As this is just minor AB-CD target and price is not at OB, reaction should not be too deep, and last week market has reached our destination point around 1300.

By weekly chart we can't say, whether price will drop further or turn up again. Weekly trend still stands bullish, but price is not at OS. But, at least minor bounce could happen here, as reaction on Fib support area.

Second AB-CD is a minor one and it stands inside CD leg of larger one. Its target also has not been met. This gives some hope that gold market at some moment should turn up again, as soon as downside retracement will be completed. At the same time, completion of this AB-CD could give us weekly "222" Sell, if of course price will not jump above 1380 area:

Daily

Here we have almost the same picture as on Friday. As gold has reached strong daily support area, that includes K-support, MPP and OS, we count on some meaningful upside bounce. Actually, we again have DiNapoli bullish "Stretch" pattern here.

Now our major interest stands around upside leg. Potentially gold could form deeper AB-CD retracement to 1260 area, as scale of retracement has increased. But we will get more insight around 1325-1330 area. Also it will depend on nature of this action. Gradual movement will suggest more chances for downside AB-CD, while fast and thrusting action mostly is typical for "V" shape retracement and could point on long-term upside trend continuation:

Intraday

Friday action was rather shy and intraday charts barely have changed. On 4-hour chart we still see lazy reaction on AB-CD pattern, although it has not been completed totally, that's why we do not exclude chances on last minor leg down, before upside reversal.
Definitely here the major indicator is upper border of the channel. Once it will be broken, this will be clear sign on real upside bounce out from 1300 daily support:

On hourly chart we also do not have yet something special. Our "222" Sell pattern has worked, but it reached just minor 3/8 retracement target. Now price stands rather stable around 1298 Fib resistance. Potentially price could form Butterfly "sell" and test WPP on Monday.

But, as you could see all these patterns have limited scale and can't shed any light even on daily perspective. That's why it seems that right now it is better to sit on the hands. If you're bullish - you do not have yet any patterns that could let you to go long with confidence, except may be daily Stretch pattern.

If you're bearish - price right now stands in strong daily support area and it is rather risky to go short here. Besides, no patterns as well on bearish side... So let's see whether we will get any clarity on next week.

Conclusion

As monthly/weekly trend stands bullish and downside action has no signs of collapse, we treat this action as retracement by far. It has reached our first destination point around 1300 area.

Now we're mostly watching for reaction on strong daily support that trigger some bounce up. This bounce could become either "BC" leg of greater bearish AB-CD pattern, or real upside trend continuation.
As we do not have yet any clear patterns that could point on bullish reversal on intraday charts, we need to be patient and wait a bit more.


The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.

 

[Sive Morten]

Good morning,

(Reuters) - Gold held steady on Tuesday after rising over one percent in the previous session, supported by
safe-haven demand amid rising tensions surrounding North Korea and as the dollar eased from near three-week highs.

Spot gold was nearly unchanged at $1,310.61 per ounce at 0339 GMT, not far from Monday's high of $1,311.50, when it marked its biggest intra-day percentage gain since Sept. 7. U.S. gold futures for December delivery rose 0.2 percent to $1,314.30 per ounce.

"The sharp sell-out in the equity market and rising risk aversion (are driving gold prices)," said Richard Xu, a fund manager at China's biggest gold exchange-traded fund, HuaAn Gold.

North Korea's foreign minister said on Monday that a weekend tweet by President Donald Trump counted as a declaration of war on North Korea and that Pyongyang reserved the right to take countermeasures, including shooting down U.S. bombers even if they are not in its air space

"Gold will continue to be headline-driven in the short term," said Jeffrey Halley, a senior market analyst with OANDA.

Asian shares slumped on Tuesday while the dollar remained off recent highs against the yen against the backdrop of rising tensions on the Korean Peninsula. Investors also awaited a speech on "inflation, uncertainty, and monetary policy" by U.S. Federal Reserve Chair Janet Yellen, in Cleveland at 1645 GMT.

"Chinese real estate developers getting hit pretty badly (on Monday) because of the curbing of property sales and the downgrade of China's sovereign rating are also causing people to rethink their risky positions," Xu said.

China and Hong Kong shares fell on Monday, led by property stocks after some cities imposed new housing controls to hose down an overheated market. Monday's weak performance followed a hawkish Federal Reserve policy statement last week and Standard & Poor's downgrade of China's sovereign credit rating.

Spot gold may test a support at $1,252 in three months, a break below which could trigger a further drop towards the next support at $1,174, Reuters technical analyst Wang Tao said.

On gold market price finally has shown action that we've suggested on weekend, as price stands at strong daily support area and upside reaction is natural here.

Now, the major question is how extended this retracement could be. Second, what we will get next - either deeper bearish AB=CD pattern or upside trend continuation:

On 4-hour chart market has completed first condition - broke downside channel, but at the same time no upside reversal swing has been formed as sequence of lower lows lower highs is still valid. 1314-1316 K-resistance is another limiting factor for upside action which holds price appreciation:

On weekend there was no clear pattern on market and we've made a decision to wait a bit more, because real reversal pattern should be greater and more extended. Now we see what it could be - reverse H&S pattern:

If this pattern will materialize, it should push price to 1329 area approximately, which corresponds to daily picture of large AB=CD pattern. Now we need just watching whether this will happen or not. Also be ready to "222" Buy pattern here as it very often forms on final part of H&S patterns.

 

[Sive Morten]

Good morning,

(Reuters) - Gold was largely unchanged on Wednesday after falling over one percent in the previous session on hawkish comments from U.S. Federal Reserve Chair Janet Yellen, while lingering North Korea worries supported prices.

Spot gold inched 0.1 percent higher to $1,294.89 per ounce at 0425 GMT. In the previous session, prices fell 1.3 percent in what was the biggest loss in over two weeks. U.S. gold futures for December delivery fell 0.3
percent to $1,297.80 per ounce.

"Gold lost what it gained on North Korea (tensions) since Friday after Yellen's comments, said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank. "But I think the (North Korea) situation is more serious than the Fed's policies. So, gold is supported around here and I expect prices to go back up to $1,300 an ounce."

On Tuesday, Yellen said the Fed needs to continue gradual rate hikes despite broad uncertainty about the path of inflation - remarks that acknowledged the central bank's struggles to forecast one of its key policy objectives.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the greenback. A strong U.S. inflation reading could raise expectations for
future interest rate increases. President Donald Trump warned North Korea on Tuesday that any U.S. military option would be "devastating" for Pyongyang, but said the use of force was not Washington's first option to deal with the country's ballistic and nuclear weapons program.

"The wild card, as usual, is the North Korea situation, something that is very hard to quantify at this stage," INTL FCStone analyst Edward Meir said in a note Geopolitical risks can boost demand for safe haven assets
such as gold.

The dollar climbed to a one-month high and bond yields rose as risks grew for a U.S. interest rate hike in December, while Asian stocks hovered near multi-week lows as tensions in the Korean peninsula remain elevated.

The biggest focus for the market for Wednesday is the announcement of a tax plan by the U.S. administration and Republicans in Congress.

O gold market recent Fed comments have pushed price down stronger but still, gold could shows deeper retracement up. In fact, on daily price just returned back to K-support area and now it is most important what will happen around 1291 lows:

On 4-hour chart now price re-testing broken channel. In fact here we will be watching for Double bottom pattern. This is actually the last bullish shape that market could form here:

To understand whether this indeed will be double bottom, or market will just break down further - today we will watch for this a kind of AB-CD and particular for last moment of this action. If gold will form some bullish reversal pattern right at the bottom, for example butterfly, or, will show W&R of first bottom - this will be important sign that indeed, Double bottom is possible. In this case gold still could reach 1330 area:

In fact, chances are not poor, because rate increase mostly has been announced, tensions around N. Korea has not disappeared and today will be announce of tax plan in Congress. Gold stands at strong support and chances on upside reversal are not lost totally yet...

 

[Sive Morten]

Good morning,

(Reuters) - Gold held steady on Thursday after hitting a more than one-month low, pressured by the increasing likelihood of a U.S. interest rate hike in December and as a new tax plan boosted the dollar on the back of stronger economic data.

Platinum, meanwhile, was trading at a discount to palladium for the first time since 2001 on waning demand for diesel cars.

"Higher U.S. yields and continued strength in the U.S. dollar post-President Trump's tax announcements has eroded gold's asset appeal in the absence of geopolitical sabre rattling in the last couple of days," said Jeffrey Halley, senior market analyst at OANDA.

Spot gold was nearly unchanged at $1,280.26 per ounce at 0501 GMT after it hit its lowest since Aug. 25 earlier in the session. U.S. gold futures for December delivery fell 0.3 percent to $1,283.30 per ounce.

"In the near term, we're still looking at interest rates for direction," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

"There is a 75 percent chance for a rate hike in December now and unless North Korea does something, I think gold will be under pressure."

France's foreign minister said on Wednesday that Donald Trump's verbal jousting with North Korea was perhaps not the best method to handle the nuclear crisis and urged the U.S. president to focus his attention on raising diplomatic pressure on Pyongyang.

The dollar and U.S. bond yields rose on Thursday after President Trump proposed the biggest U.S. tax overhaul in three decades and as strong economic data added to the case for a rate hike by the Federal Reserve later this year.

A stronger dollar makes bullion more expensive for holders of other currencies, while higher interest rates lead to higher bond yields and dampen demand for non-yielding gold.

Gold market has erased last bullish hopes on upside action as daily K-support has been broken after tax reform has been announced. Correspondingly, no bullish patterns were formed on intraday charts.

As gold is not at OS and major support has been broken - most probable next destination point is 1260-1265 K-support and daily OS. Also we have MPR1 around 1273 area:

On 4-hour chart price has returned back in downside channel. It means that gold should proceed to lower border of the channel, which also stands around 1260 right now:

On hourly chart gold has erased last chance for Double Bottom pattern, obviously no reversal patterns were formed. Downside stands rather smooth and gradual, which suggest hidden bearish power. Here we have minor AB-CD pattern and next destination point is 1268 area

So, recent action bring clarity as bullish scenarios have been erased and only bearish one now stands on market. It seems that we could watch for pullbacks to sell into.

 

[Sive Morten]

Good morning,

(Reuters) - Gold fell on Friday, inching towards the previous session's six-week low as the dollar strengthened, with prices set for their biggest monthly fall this year. Spot gold declined 0.2 percent to $1,284.28 per ounce at 0434 GMT, on track to register a 2.8 percent decline in September, the largest monthly fall so far in 2017 and the biggest monthly drop since November.

However, it was set to end the quarter up around 3.5 percent after prices rose in July and August.
U.S. gold futures fell 0.1 percent to $1,287.70 per ounce. Gold is mostly being influenced by the dollar's movements in an otherwise quiet session, said Yuichi Ikemizu at ICBC Standard Bank in Tokyo.

The dollar rose against a basket of major currencies on Friday. The greenback pulled back from a one-month high reached earlier on Thursday as investors this week were supportive of the Trump administration's tax plan and the outlook for Federal Reserve policy.

"As long as nothing happens on the North Korea front, I guess we'll have a pretty quiet Friday," Ikemizu said.
Russian and North Korean officials will meet in Moscow on Friday to discuss the North Korea crisis.

"(Gold) will likely continue to struggle in the short term against a backdrop of higher interest rates, particularly in the U.S. and possibly in the U.K. and Europe," said INTL FCStone analyst Edward Meir.

Proposed U.S. tax reforms and strong economic data that supported the case for another U.S. interest rate hike this year have weighed on gold. Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.

On gold market price action is not impressive at all. Actually we do not have any patterns here, except may be hourly chart. On daily - market shows minor upside bounce in empty space - no support, pivot or OS level stand below the market. And I think that this action comes from USD retracement. Despite this action, we still think that gold could drop further to 1260-1265 Fib level within a week. This conclusion comes from relatively easy breakout of daily K-support area:

So, as gold brings no clear patterns and setups, why we mostly drag&drop here our FX analysis, because on intraday charts patterns are the same.
On 4-hour chart also nothing special stands, except may be bullish divergence with MACD and minor extension support;

The only pattern that we have stands on hourly chart and it is the same as on EUR and AUD - small reverse H&S pattern. It means that we should be ready for higher upside bounce in shape of AB=CD probably. Somewhere to 1293-1295 area. This was daily K-area previously, by the way. Thus, it seems that it is too early to go short as we should get better entry levels.
Scalp traders could think about using this H&S pattern, but be aware of consumption statistics that will be released later in the day: